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Cybersecurity

How to spot—and stop—fraud and imposter scams

See the red flags in common scams and adopt a few simple prevention habits.


 

We all know that fraud is a danger and individuals can lose their hard-earned money to criminals. 

The question is: What can each of us do to protect ourselves?

The first step, of course, is becoming aware of how big the threat has grown. Victims of impersonation scams alone lost more than $3.3 billion in 2020. And older people are disproportionately targeted: There were 105,300 complaints reported by victims over the age of 60—with losses estimated at more than $966 million.1

It’s also vital for us to learn how to spot fraudsters and scams when they show up in our lives. It isn’t always obvious.

Hearing real-life examples of common scenarios can help hone our instincts. So here are the stories of how George and Shannon fell victim to common imposter scams, the red flags they missed, and the countermeasures you can take to stop these misfortunes from happening to you. Getting into a few habits can help keep fraudsters at bay.

George’s story

George,* now in his 70s, has always taken pride in handling the accounts for his family. Recently, he received a phone call from a person claiming to be a representative from his financial institution.

The caller said George’s assets were at risk of being stolen by fraudsters. To protect him, the caller said, a “safe banking account” had been opened for his use. George was instructed to liquidate his current accounts and send those assets to the “secure” account as quickly as possible.

Concerned, George began the process of withdrawing and transferring funds.

Over the next 20 days, this scam artist remained engaged with George while he initiated 20 transactions of various amounts with the goal of moving his entire life savings into the banking account provided by the caller.

The continuous activity in George’s account raised a red flag at his bank. George’s client service team repeatedly questioned him about these transactions, but George kept saying only that, yes, he intended for these to happen. Only when George’s banker contacted him did George finally share why he was making so many transactions. By that time, about a quarter of the funds he had placed in the external account already had been withdrawn by the fraudster.

How could George have known earlier that he was being defrauded?

The red flags George missed and the actions we all should take when confronted with a similar scenario are simple:

  1. Red flag—George did not know the caller and had no proof that the person represented his financial institution.

    How to prevent fraud—If anyone calls claiming to be from your bank, ask for more information and be wary of anyone who hesitates, is reluctant or unable to provide identifying information. Also, to verify the legitimacy of any caller, call your financial institution directly on a number you know belongs to it. (To find the number, look at your last statement or on the back of your credit card.)

  2. Red flag—Fraudsters often claim there is a crisis and your urgent action is needed.

    How to prevent fraud—Always take the time you need to verify that each recommended step is actually in your best interest. Before taking action, contact your banking team for more information. Also, consider enabling account alerts to receive notification of account activity.

  3. Red flag—The fraudster set up an account for George and asked him to transfer money into it.

    How to prevent fraud—Always be wary when asked to send funds to a specific account, or a “safe account.” Never assume a caller or the information they share is genuine. Contact your financial institution if you have concerns about your account.

Shannon’s story

Shannon,* 35, thought she was protecting herself—and she was, to some extent: She took the excellent step of enrolling to receive communications about her accounts’ activity with her bank.

One day, she received a text asking for confirmation of a money movement transaction to a third party. She replied to the message saying that the transaction was not legitimate.

Shortly after, she received a call from an individual claiming to be from her bank. This person said that in order to reverse this fraudulent transaction, Shannon would need to send a mobile payment for the same amount to her husband, who was a joint account holder, using his phone number. The fraudster claimed that, in this way, Shannon would be sending the funds back to herself.

What Shannon didn’t know was that the fraudster used her husband’s phone number to create a new mobile payment account at a different bank. Therefore, when Shannon sent the money to her husband’s phone number, it was redirected to the fraudster’s account.

What could Shannon have done differently?

Shannon was busy with her daily life, and thought she didn’t have the time to dig into any details of a transaction she thought she’d already told her bank was fraudulent. But failing to check twice, she wound up paying a steep price in time, money and aggravation. 

  1. Red flag—Shannon did not know the sender of the text message. She also did not know the caller who claimed to be from her bank.

    How to prevent fraud—Never assume texts, calls or emails are from whom they claim to be from. Fraudsters can spoof or mimic legitimate organizations’ contact details. Always verify by independently contacting your financial institution.

  2. Red flag—Shannon didn’t review payment details before sending the funds.

    How to prevent fraud—When sending a payment digitally, some payment platforms will ask you to verify the account name at the beneficiary bank. In this case, Shannon received a warning that the name she entered (her husband’s name) did not match the name at the beneficiary bank. Taking a few seconds to review all of the details on the screen would have prevented her loss.

  3. Red flag—The so-called banker asked her to send funds from her account.

    How to prevent fraud—Read all notifications carefully before making any digital payments. Check that numbers of accounts on payments are correct and known. And always call your financial institution if you have any questions. Digital payments are like giving cash and cannot be reversed; you have to rely on the recipient to return the funds. Also, periodically review your account for suspicious activity. If an individual claims there is an issue with your account, contact your bank directly for more information.

Adopt a few crime-fighting habits

You can protect yourself from fraud by adopting a few new habits:

  • Be wary when sharing personal information, even during the course of business. Don’t assume a request is genuine or that information provided to you is real.
  • Never trust the caller ID of a phone call or text message—caller ID can also be spoofed (the name can be changed to make the call seem more legitimate).
  • Avoid answering calls from unknown numbers. Instead, allow such calls to go to voicemail. If the call is important, the caller will leave a message.
  • Never provide personal information such as PINs, passwords or one-time passcodes.
  • Use mobile payment apps only with people you know, and always confirm you have the correct username or contact information before you hit send. Funds sent to a wrong party rarely can be recovered.

We’re by your side

At J.P. Morgan, it is our top priority to protect your assets and information from increasing fraud and cybercrime threats. If you believe you may have been a victim of fraud, speak with your J.P. Morgan team immediately.

 

1. Internet Crime Report 2020, Internet Crime Complaint Center (IC3), Federal Bureau of Investigation; to file a complaint: https://www.ic3.gov/Home/EF
* - Names and details have been changed to protect our clients’ identities. Information is not a guarantee of future results.

 

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